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Cash & Liquidity Management
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Treasury Transformation to Minimise FX Risk

Featuring Kenneth C. K. Ng, Group Treasurer, DFS Group and Stephen Chan, Head of Liquidity Management, Asia Pacific, Global Transaction Services, Citi

With retail operations across Asia and beyond, DFS has cash inflows in a wide range of currencies, while most purchasing takes place in USD. Its group treasury in Hong Kong faced huge bank charges with a large number of cross-border cash transfers and the cost of buying and selling USD. Furthermore, there was a great deal of manual work required by local divisions and treasury to administer the process, and tight deadlines. DFS was therefore seeking to transform its cash management processes to avoid negative FX movements eroding the company’s profit margin, whilst reducing labour-intensive processes and external transaction costs. This would be no easy task but not impossible. To do this they required a banking partner that was committed to understanding their needs, who could successfully bring together product innovation with customer service excellence.

Designing a new cross-currency, cross-border solution

DFS approached Citi to discuss ways of enhancing the way they manage cash and foreign exchange risk, in order to make the process more convenient without increasing risk or cost. There were a variety of reasons why DFS selected Citi. Firstly, Citi already had a strong relationship with DFS as its key partner bank for global cash management and payments in both local and foreign currency. Secondly, the bank is a participant in DFS’s loan facility. However, the quality, as opposed to simply the scope, of the relationship was the decisive factor in DFS’s decision. Kenneth C.K. Ng, Director and Group Treasurer, DFS explains,

“We have had a long and successful relationship with Citi for both borrowing and cash management. A particular benefit of working with them is the quality of service that we receive, so we were enthusiastic about opportunities to extend the relationship further.”

He continues,